Wednesday, January 16, 2008

The # 6 Issue Facing American Families Today: Financial Pressure!

We have just finished the Christmas season and for many families today, the month of January is a time of reckoning, a more sober, sullen season that consists of facing even more debt than usual. Here’s what one woman says, “The pressure felt by many people to ‘have’ so much ‘stuff’ is overwhelming and credit is an easy way to fulfill the wants and perceived needs. However, its long-term affect is to cause anxiety and frustration when bills can’t be paid. The spending must be stopped.”

And another sighs, “Living costs are rising rapidly, especially in terms of health care, prescriptions and insurance premiums. It is hard to stay on budget when living costs rise significantly faster than income.”

What is becoming more common in America is for a family to turn to credit cards as a safety net in tough financial times. When the cards get maxed out families begin to tap into the equity in their homes. So, as the costs of health care, education, fuel and mortgage payments increase, families find themselves in a cycle of unnecessary punitive fees and interest rates.

So what can a dad do in light of this growing sunami of debt that appears to be ready to swamp so many family boats today?

First, face the problem. Every family makes its own choice in dealing with the temptation to live in denial and continue to delay facing the inevitable consequences that increased debt poses. To remain “in the dark” will only add to the stress. Dad, take an honest assessment with your wife of where you are and create a plan to pay off the cards with the highest interest first as quickly as possible.

Next, seek help if needed. To have a plan is to be empowered. But you may still need to connect with professional resources that are available in your community for additional support. Many churches today offer helpful programs. For example, if you happen to be in the Seattle area, my church, Northshore Baptist is offering a great program that starts in February called “Financial Peace University.” To learn more here is the link:

Then, create a budget. After you have determined how much you can devote to paying off your debt, look for ways to cut monthly expenditures. For example, eating out is much more expensive, and generally less nutritious and “family-friendly” than making meals at home.

Last, begin to save. If Christmas this past year was an experience that created more debt, you can make it your goal to start a small savings account so that the money for next Christmas will be there in an account to spend when Christmas hits. Even if the start is small, it is important to begin! This may take more than one year before it really works, so be patient.


Anonymous said...

Keeping your finances in check is critical for a healthy family.

Anonymous said...

Wow... this hit home for me today as we are in the throws of begining to refinance our home. The tendency is to roll the debt into the loan and clear off all the interest. While that may sound like a good option, two things occur. First, your loan in higher than it needs to be and you are saying it's ok to take 30 years to pay it off. Secondly, with the credit cards at a new balance of zero, the temptation is there to run them back up again. Since having a card is pretty much common (especially for emergencies)only one card is really necessary. Visa & Mastercard are taken everywhere. So why do I need Sears, Penny's, Macy's, etc. Keep one card, cut the rest up and your budget will do the rest.